AUC Properties Limited v Rotorua District Council [2012] NZHC 1509 (29 June 2012)

Last Updated: 18 July 2012

IN THE HIGH COURT OF NEW ZEALAND ROTORUA REGISTRY

CIV-2012-463-000022 [2012] NZHC 1509

BETWEEN AUC PROPERTIES LIMITED Plaintiff

AND ROTORUA DISTRICT COUNCIL Defendant

Hearing: 19 June 2012

Counsel: D M O'Neill for plaintiff

F C Wood for defendant

Judgment: 29 June 2012

_{JUDGMENT OF ASSOCIATE JUDGE ABBOTT}

This judgment was delivered by me on 29 June 2012 at 11am, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date...............

Solicitors:

R W O'Connor, Hassall Gordon O'Connor & Newton, P O Box 76, Tokoroa

F Wood, Davys Burton, P O Box 248, Rotorua

Counsel:

D M O’Neill, Barrister, PO Box 815, Waikato Mail Centre, Hamilton 3240

AUC PROPERTIES LIMITED V ROTORUA DISTRICT COUNCIL HC ROT CIV-2012-463-000022 [29 June

2012]

[1] This proceeding arises out of negotiations between the parties over the proposed development of land belonging to the plaintiff for a recycling centre for the defendant.

[2] The plaintiff, AUC Properties Limited (AUC), contends that it reached agreement with the defendant, Rotorua District Council (RDC), on the essential terms for a lease of the land, before RDC decided not to proceed. AUC seeks specific performance of the alleged agreement to lease. It says that its entitlement is clear from the documentary exchanges and undisputed facts, and seeks summary judgment.

[3] RDC acknowledges that negotiations were well advanced before it decided that it would not take a lease of the land, but says that they had not reached agreement on the essential terms before it withdrew from the negotiations. In the alternative, it says that if agreement was reached orally on the essential terms, the agreement is not binding by virtue of s 24 of the Property Law Act 2007. RDC contends that these are not matters that can be determined summarily.

Background

[4] AUC is the owner of a block of industrial land at Ngongataha.

[5] In 2008 RDC decided to upgrade its recycling services both at existing premises in the centre of Rotorua, and at new premises to be established on a “satellite” site away from the centre.

[6] AUC’s managing director, Mr Bray, learned of RDC’s plans. He approached RDC and invited it to consider land owned by AUC for the Ngongataha recycling centre. RDC’s works manager (Mr Dine) met with Mr Bray in August 2010 to view a site at the corner of Taui and Wikaraka Streets, Ngongataha (known as 22 Taui Street) and discuss RDC’s requirements. There was “agreement in principle” that the site was suitable, and as to the development that would be required (a facility built to

RDC’s design for lease to RDC), and that the parties would negotiate over the terms of a lease.

History of negotiation

[7] Mr Dine and RDC’s manager of finance and corporate services, Mr Christophers, met with Mr Bray on 18 October 2010 and discussed key terms for the lease, including a mechanism for reaching a rental figure related to land and development cost.

[8] Following that meeting, one of RDC’s staff, Ms Phillips, wrote to RDC’s valuer asking for a valuation of AUC’s site, for the initial market rent based on RDC’s view of the likely terms discussed on 18 October 2010. When reporting, the valuer noted his understanding of his instructions as being to provide an appropriate percentage rate to be applied to the development cost to arrive at a suitable market rental.

[9] In the meantime, RDC engaged an architect to prepare a design for both facilities (the city centre and the Ngongataha site) starting with an initial concept design. By the time RDC received its valuer’s advice on the methodology for rental, its design plans for the Ngongataha site were well advanced (when advising AUC of the advice from its valuer, RDC indicated that it was wanting to go to tender as soon as possible).

[10] AUC also obtained its valuer’s advice on the mechanism for reaching a market rent. Its valuer accepted the methodology proposed by RDC’s valuer (a percentage rate applied to development cost) but differed as to the rate. AUC’s advice was for a return of 18.5% on improvement cost, as against RDC’s advice that the appropriate rate would be a 15% - 16% return. AUC’s valuer also advised AUC on two special terms under negotiation, a penalty for early termination and an option to purchase.

[11] By early April 2011, matters had advanced sufficiently for RDC to lodge information needed for a project information memorandum and to apply for a

building consent for the 22 Taui Street site. Although the application was made in the name of AUC, it was signed by Mr Dine as owner, reflecting the fact that RDC was determining the nature of the development. RDC submitted a draft form of lease with the application, showing a 30 year term with three rights of renewal, but rent still to be fixed. Mr Dine says that the lease was included to comply with the Council’s requirement that applications be made by the owner or a lessee.

[12] In mid April 2011 RDC sent AUC a draft of a lease agreement, including its offer of rent based on 16% of the improvement cost, and requested that AUC either advise its agreement or inform RDC of any changes required. RDC confirmed that the construction work was out for tender, and a building permit had been applied for. The draft lease contained a change to the term that had been discussed up to that point (either 24 years or 30 years, with three renewals of six years): an initial term of

10 years was stipulated, with four renewals of five years. The lease also contained specific clauses dealing with early termination (within the first 10 years), and an option to purchase.

[13] Shortly after this, RDC issued a project information memorandum to the architect who was to oversee the construction work, although noting that resource consent was still to be issued.

[14] AUC referred RDC’s draft lease to its solicitors and on 2 May 2012 wrote back to RDC informing it that it had been advised, as no building currently existed, that the proper process for the arrangement that the parties were contemplating was to enter into an agreement to lease, and complete a lease once the building had been constructed.

[15] On that basis AUC enclosed an agreement to lease, contending that its terms and conditions were as discussed in the 18 October 2010 meeting, and reflected the methodology for determining rental identified in the parties’ valuers’ reports. The agreement to lease was signed by Mr Bray, for AUC, and stipulated a rate of 18.5% of all building and development costs as the annual rental. The agreement to lease reverted to a 30 year term with rights of renewal for a further three terms of six years. It provided for a deposit of $80,000, and contained several special terms (the

agreement was on a standard Auckland District Law Society (ADLS) form), including an option to purchase which differed from the clause in the draft lease sent by RDC in mid April. The agreement to lease did not contain any provision for early termination.

[16] In AUC’s covering letter, Mr Bray pointed out that the draft lease agreement that had been submitted by RDC had not been in the standard ADLS form, and contained markedly different terms to those discussed previously, including at the meeting on 18 October 2010. He commented:

I had been under the impression that nearly all of the terms were agreed and that the only point of negotiation left between the parties was a 2.5% difference in the percentage rate applicable to the improvements cost.

[17] Mr Bray commented on three specific aspects in particular:

(a) He reiterated that both parties had had reasons for requiring a long term lease, and RDC’s stipulation for a six month termination clause left AUC exposed to a massive risk having regard to the development cost and return on its investment. For that reason he had moved back to the term originally discussed.

(b) In the parties’ previous discussions, the rights of renewal had been aligned to operational contracts for the recycling centres, so he had returned to that.

(c) He discussed the factors underlying the different rates of return proposed by the valuers, and said that he had included the rate of

18.5% by eliminating returns obtained on properties which he suggested were not proper comparables.

[18] Mr Bray signed the agreement to lease before sending it to RDC, and also asked RDC either to advise of its agreement to the proposal or any changes required.

[19] On 17 May 2011 Mr Dine telephoned Mr Bray and said that he wished to discuss an alternative site that Mr Bray owned. At the end of April 2011, the local

newspaper had published articles about the redevelopment of the city centre site and the leasing of AUC’s Ngongataha site as a recycling depot. A few days later another article appeared referring to a local marae having objected to the proposed development of the 22 Taui Street site. RDC met with objectors in May 2011, but denies that it went back on any agreement with AUC due to the objections.

[20] Mr Bray, Mr Dine, and Mr Claassen (RDC’s group manager for infrastructure services) met on 23 May 2011. By that time RDC had received an acceptable tender for the building, and a building consent had been issued. Mr Bray contends that they were happy with the lease save for wanting a “get out” clause. Mr Bray says that although he believed that they had an agreement already, he agreed that a “get out” clause could be included on the ground that RDC accepted the 18.5% return on investment sought by AUC. Mr Bray says that this was agreed and the parties shook hands. Mr Dine and Mr Claassen deny that there was any such agreement.

[21] On 16 May 2011, Mr Bray again wrote to Mr Dine enclosing a revised

agreement to lease prepared by AUC’s solicitors, stating that it included as clause

12.4 of the special conditions a “get out” clause as discussed on 23 May 2011. The agreement to lease produced in evidence unfortunately was incomplete, in that it had only the first page of the four pages of special terms that had been included in the agreement sent with AUC’s letter of 2 May 2011. However, it included an extra page which appears to contain the text of the suggested “get out” clause, although the clause is numbered 2 rather than 12.4 as stated in Mr Bray’s letter. The clause provided a mechanism for compensation to AUC in the event that RDC terminated the lease after an initial term of 18 years (RDC being unable to terminate within that initial period).

[22] After referring to the inclusion of the “get out” clause, Mr Bray stated:

I hope that this is now a completed agreeable agreement for council’s

representatives to sign off on.

[23] On 3 June 2011 Mr Bray telephoned RDC and spoke to Mr Claassen. He says that “all of a sudden there were all new issues to deal with”. He understood that the Council was backing away from the term of the lease and the break clause costs,

and was now considering purchasing its own site. Mr Claassen acknowledges that he told Mr Bray that RDC was considering purchase of land instead of a lease, and that he formed the view that there was little point negotiating further as Mr Bray was not going to agree to RDC’s requirements for the lease.

[24] On 20 June 2011 RDC’s Infrastructure Services Committee met and considered a report from Mr Claassen updating it on land negotiations (there were three sites under consideration). The Committee resolved that another site (referred to as Ngongataha Road) would not be considered further as a viable option but staff were to carry out further investigations in respect to the other two sites.

[25] Mr Claassen says that all options (including the lease proposal as put to RDC by AUC) were put to RDC’s Executive Committee. On 9 September 2011, Mr Claassen wrote to Mr Bray to inform him formally that RDC had rejected the offer to lease, but offered to purchase another, nearby, property owned by AUC, some 200 metres from 22 Taui Street, at 14 – 18 Wikaraka Street. AUC rejected that offer. Mr Bray says it did so because it believed it had an agreement on the 22 Taui Street site.

The opposing contentions

[26] AUC says that by the time it tendered its agreement to lease to RDC on 26

May 2011, the parties had reached agreement orally on the essential terms for the lease. Counsel argued that this agreement had been reached on a step-by-step basis, and submitted that it was apparent from the correspondence and the parties’ conduct, that by 26 May 2011 they intended to be bound.

[27] AUC then says that this agreement is binding on RDC, because it (AUC) has at the request of RDC given notice to its tenant, and has entered into a lease of adjoining land in reliance upon the agreement with RDC. It contends that those matters constitute acts of part performance.

[28] RDC’s primary position is that the parties did not reach agreement on the essential terms. In the alternative it says that even if there was agreement orally on the essential terms, the agreement is not binding as the alleged acts of part

performance were merely preparatory or ancillary to the agreement and were not acts pursuant to the contract. In any event, RDC says that for the purposes of this application there are disputes as to the terms of any agreement, and as to the alleged acts of part performance which make the matter unsuitable for summary judgment.

[29] The issues raised by these opposing contentions are:

(a) Whether the parties reached agreement on essential terms, as evidenced by the correspondence between them and other conduct;

(b) If the parties have reached agreement on essential terms, whether AUC has performed acts of part performance so as to make the oral agreement binding; and

(c) Whether these matters can be determined on this application for summary judgment.

Principles for summary judgment

[30] The principles on which the Court acts in considering an application for summary judgment are well established, and are not in contest in this application. They were first stated by the Court of Appeal in Pemberton v Chappell1 and have been succinctly restated by the Court of Appeal in Krukziener v Hanover Finance Limited.2 The essential principles for the purpose of the present application can be stated as:

(a) The Court may grant summary judgment if a plaintiff satisfies it that there is no defence. The onus is on the plaintiff. The Court must be left without any real doubt or uncertainty.

(b) The Court will not normally resolve material conflicts of evidence, or assess the credibility of statements made in the affidavit evidence.

_{Having said that, the Court is not required to accept uncritically}

1 _{Pemberton v Chappell [1987] 1 NZLR 1 (CA).}

2 Krukziener v Hanover Finance Ltd [2008] NZCA 187, (2008) 19 PRNZ 162 at [26].

evidence that is lacking in credibility (examples given by the Court of Appeal in Krukziener v Hanover Finance Ltd3 where the evidence is inconsistent with undisputed contemporary documents, or other statements by the same deponent, or is inherently improbable).

(c) Where the plaintiff’s evidence establishes a prima facie case, the defendant will have to respond with material sufficient to raise an arguable case.

(d) Unequivocal statements in an affidavit, alleging facts which if true would found a defence to the claim, will be a sufficient basis for refusing summary judgment (the Court does not need to be convinced as to the ultimate truth of the allegation).4

Legal principles relating to agreements to lease and part performance

[31] Parties will frequently embark on negotiations with the intention of reaching an agreement, but may fail in that objective because they have not reached agreement on a term or terms that are necessary to produce the outcome they are seeking. Whether their negotiations have reached the point that they intend to be bound has to be considered in light of the terms which would be expected in the type of contract that they are negotiating. There will be terms on which they need to reach agreement as it is impossible for the Court to determine intention in respect of those terms by implication, by reference to what was reasonable in the circumstances

or to some other objective standard.5

[32] Even where parties are ad idem concerning terms essential to the formation of the contract of the type under negotiation, they may not have achieved formation

_{of a contract if there are other matters, not agreed, which the parties themselves}

3 _{Ibid at [26], referring to Eng Mee Yong v Letchumanan [1980] AC 331 (PC) at 341.}

4 _{Local Courier Service Ltd v Kesha (1995) 8 PRNZ 690 (HC).}

5 Electricity Corporation of New Zealand Ltd v Fletcher Challenge Energy Ltd [2002] 2 NZLR 433 (CA) at [50].

regard as pre-requisite to any agreement, for them alone to determine. In those circumstances there is still no intention to contract.6

[33] Accordingly, the pre-requisites to formation of a contract are:

(a) An intention to be immediately bound (at the point when the bargain is said to have been reached); and

(b) An agreement (either express or found by implication or a mechanism for achieving agreement) on every term which was legally essential to the formation of the type of bargain, or was regarded by the parties as essential to their particular bargain. A term is to be regarded as essential if one party maintains the position that there must be agreement on it, and makes its position clear to the other party.7

[34] These matters are to be determined objectively. In doing so the Court may look to background circumstances, including the statements made in the course of negotiations. The Court can also have regard to the subsequent conduct of the parties towards one another.8 However, it is unclear whether that may extend to include internal memoranda, communications with third parties and statements made in the course of giving evidence.9

[35] A commercial lease is a creature of contract, although once formed it has been said to be part contract and part property.10 The essential elements of a valid lease are the legal right of exclusive possession of premises, for a definite period (that is, having a certain time for commencement and for ending) and it must be created in an appropriate form. To satisfy the first of these elements, there must be certainty about the premises. Leases may be created formally, or informally by

_{agreement to lease.}11

6 _{Ibid at [52].}

7 _{Ibid at [53].}

8 _{Ibid at [54] and [56].}

9 _{Ibid at [56].}

10 _{Linden Gardens Trust Ltd v Lenesta Sludge Disposals Ltd [1994] 1 AC 85 (HL) at [108].}

11 See definition of “lease” in Property Law Act 2007, s 2.

[36] The essential elements of an agreement for lease are the identity of the parties, the identity of the land or premises, and either the term (commencement and duration) and rent payable, or a means of ascertaining those matters.12

[37] Except in the case of a short-term lease of one year or less,13 an agreement to lease (being a contract for disposition of land) is not enforceable unless it is in writing, or its terms are recorded in writing, and the contract or written record is signed by the party against whom the contract is to be enforced.14 The requirement that the agreement be in writing, and signed, does not apply where there has been an active part performance by the party seeking to enforce the contract, in which case peril evidence of the contract may be given and specific performance may be granted.15

[38] The matters that the Court will consider when deciding whether there is part performance were addressed by this Court in T A Dellaca Ltd v PDL Industries Ltd:16

... I am of the view that in a part performance case the Court must consider three points which I would frame as follows:

1. Was there a sufficient oral agreement such as would have been enforceable but for the Act?

2. Has there been part performance of that oral agreement by the doing of something which:

(a) clearly amounts to a step in the performance of a contractual obligation or the exercise of a contractual right under the oral contract; and

(b) when viewed independently of the oral contract was, on the probabilities, done on the footing that a contract relating to the land and such as that alleged was in existence.

3. Do the circumstances in which that part performance took place make it unconscionable (fraudulent in equity) for the defendant to rely on the Act?17

12 Kooky Garments Ltd v Charlton [1994] 1 NZLR 587 (HC). See also NZI Insurance Australia Ltd v

_{Baryzcka [2003] SASC 190 at [31].}

13 _{Property Law Act 2007, s 207.}

14 _{Property Law Act 2007, s 24.}

15 _{Hinde, McMorland & Sim Land Law in New Zealand (LexisNexis, Wellington, 2004) at [11.039].}

16 T A Dellaca Ltd v PDL Industries Ltd [1992] 3 NZLR 88 (HC) at 109. These comments have subsequently been confirmed by the Court of Appeal: Mahoe Buildings Ltd v Fair Investments Ltd [1994] 1 NZLR 281 (CA) at 287.

17 The Court was referring to s 2 of the Contracts Enforcement Act 1956, being the forerunner to s 24 of the Property Law Act 2007.

[39] It is not sufficient for the plaintiff seeking to enforce the contract merely to prove acts performed in reliance on the formation of the contract, or that the acts were to his or her detriment. The act must be one undertaken by the plaintiff in performance of an obligation, or exercise of a contractual right, under the contract to be enforced. An act collateral or ancillary to performance of a contractual obligation or exercise of a contractual right under the contract is not an act of part performance,

even if performed in reliance on the contract.18

Was there agreement on essential terms?

[40] AUC’s case, in essence, is that the parties progressively worked through, and agreed, by early May 2011 all the terms that were necessary for a concluded agreement. AUC submitted that this was apparent from the exchanges of correspondence, and that RDC’s oral evidence that it had not reached agreement on matters such as the term of the lease, the rental to be paid, and the “get-out” clause, was simply not credible having regard to the steps taken (and expense incurred). Counsel argued that RDC’s acts were far more persuasive. He submitted that RDC had had a change of heart as a consequence of the objections raised by the local marae, and invited the Court to take a robust approach based on the clear picture that emerged from the documentary evidence:

(a) RDC agreed in principle in October 2010 that the site was suitable, and entered into negotiations on terms.

(b) The essential terms were identified in the meeting on 18 October

2010, and many were agreed (for example the site to be leased, the methodology for determining rent and the use of the ADLS lease as the form).

(c) RDC had design drawings prepared, and proceeded to seek a building consent.

18. T A Dellaca Ltd v PDL Inustries Ltd, above n 16 at 106 and see the analysis of cases therein.

(d) RDC’s internal correspondence and reports referred to a site having been secured, draft leases submitted to its valuer and in support of a building consent showing the term of the lease.

(e) RDC advised AUC in its correspondence in February 2011 that it wished to go to tender as soon as possible, and went ahead with processing a building consent, including discussion over an amalgamation of titles (there were two lots in the site).

[41] Counsel for AUC also referred to Mr Bray’s evidence that he was told by Mr Dine and Mr Claassen on 23 May 2011 (before he submitted the signed agreement to lease on 26 May 2011) that they “had a deal” and although the agreement would have to go to the Mayor’s office for signature, that was a mere formality. Counsel for AUC also relied on Mr Bray’s evidence that Mr Dine requested that he have a vacant site available by the beginning of May 2011 so that construction work could start promptly (he acknowledges that Mr Dine disputes this evidence but says that it speaks for itself that he would not bring an existing tenancy to an end if he did not have an agreement).

[42] In summary, counsel for AUC submitted that the correspondence and acts of the parties supported there being agreement on all essential terms for a valid agreement to lease:

(a) The initial term of 30 years plus three rights of renewal of six years, commencing on completion of the building (as evidenced by the draft letters that RDC submitted to its valuer and to support the application for building consent);

(b) The mechanism for establishing rental was agreed, and the only difference was as to the comparative examples to be used to come to a figure; and

(c) The use of the ADLS form had been settled as far back as October

2010 (as evidenced by the instructions by RDC’s legal administration officer to its valuer).

[43] I am not persuaded that I can determine these points in a summary judgment application. Dealing first with the term, although there is support for the initial term of 30 years followed by three rights of renewal of six years, there is also evidence that RDC was still considering its position in May 2011 (it had presented a draft lease showing a term of 10 years, and the “get-out” clause discussed at the meeting on 23 May 2011 was clearly a relevant consideration in deciding the term of the lease). I accept the submission of counsel for RDC that the terms of any “get-out” clause were important to RDC and there is no evidence (even from Mr Bray) that the terms were discussed, let alone agreed, at the meeting on 23 May 2011.

[44] Similarly, I do not accept that it could be said that there is no argument on rental. Even if AUC is correct that the rate of return could be ascertained by application of the correct comparable examples (a point on which I have considerable doubt), RDC’s evidence is unequivocal – it was not prepared to go past the 16% return recommended by its valuer. There is a direct conflict of evidence between the parties at the 23 May 2011 meeting as to whether there was a trade off between inclusion of the “get-out” clause for acceptance of AUC’s 18.5% rate. It is unlikely that such an agreement would have been reached without knowledge of the terms of the clause, but it is not a matter that can be determined on this application. RDC says that the terms of compensation in the “get-out” clause were out of the question.

[45] The last essential term is the form of the lease. I doubt that this can be said to be free from argument. Although RDC’s instructions to its valuer in October 2010 refer to the lease being “based on the Auckland District Law Society Lease”, it is clearly RDC’s own version of that lease. That version was not accepted, but rather AUC submitted an agreement to lease (again on an ADLS form), and there is no evidence to suggest that that form was ever agreed. These are matters that will need to be explored at trial, with the benefit of discovery.

[46] In addition to these main points on what were either recognised essential terms, or terms that were clearly (judging from the correspondence as well as the affidavit evidence) of importance to the parties, there were a number of other matters raised in the correspondence which could qualify as terms of significance, affecting the question of whether the parties intended to be bound by the terms of agreement submitted by AUC on 26 May 2011:

(a) The agreement was clearly incomplete in that at least three pages of special conditions appeared to be missing, and in his covering letter Mr Bray referred to the “get-out” clause as clause 12.4 (of the special conditions) whereas the page included was numbered clause 2;

(b) There is a dispute as to whether Mr Dine or Mr Claassen had authority to bind RDC (and signature of the agreement was merely a formality) or whether the decision was entirely one for the Council’s Executive Committee;

(c) There is a dispute as to whether it was the commercial practice of the council to embark on the process for a building consent before finalising a purchase or lease of land (relevant to AUC’s argument that RDC’s acts evidenced a binding agreement and RDC’s response that it was their practice to do so, similar to a process of due diligence);

(d) There is an issue as to whether the design was specific to the Taui Street site, or could be applied to another suitable site (this point being relevant to AUC’s argument that the commitment of considerable expense indicated a binding agreement, as against RDC’s position that this was part of the due diligence process and the costs were not wasted as the design could be used on another site); and

(e) There were three differences between the lease presented by RDC in

mid April 2011, and AUC’s agreement to lease presented in May

2011: AUC specified more items as outgoings payable by RDC, there was a difference over the mechanism for fixing value of the property

for the option to purchase, and AUC sought a deposit of $80,000 in its agreement to lease.

These matters all warrant further investigation at trial as part of the matrix in deciding whether the parties intended to be bound at the time AUC submitted its agreement to lease.

[47] Lastly, I take into account the language used by Mr Bray in May 2011, when he contends that there was agreement on essential terms:

(a) His letter of 2 May 2011 was clearly presenting arguments on commercial points for agreement by RDC, namely the term, the number and period of renewals, and AUC’s position on the rate of return. Significantly, he asked RDC to peruse the signed agreement that he had tendered and advise either of agreement or any changes RDC required. He indicated his availability for a meeting. All of these matters speak against the likelihood of a binding agreement, notwithstanding Mr Bray’s evidence that he believed that he had one.

(b) In his letter of 26 May 2011, enclosing the further signed agreements (with the “get-out” clause), Mr Bray concluded with the following: “I hope that this is now a completed agreeable agreement for council’s representatives to sign off on”. This tentative language suggests that the door remains open on an agreement.

(c) Finally, after Mr Bray learned of the objections from the local marae he wrote a lengthy email to the Mayor and councillors, in which he referred to the time and money spent by RDC to that point, the steps it had taken in preparation, and entreated them to commit to the agreement he had presented. At no point in that lengthy email did he say or suggest that RDC was already committed. Although counsel for AUC endeavoured to argue that this was a “softly, softly” approach, it is not credible that he would not have referred in some

way to commitment to a binding agreement had he believed that that was the case at that time.

[48] In conclusion, AUC must satisfy me that RDC does not have an arguable defence to its claim that the parties had concluded an agreement. I am not so persuaded.

Part performance

[49] In light of the decision I have reached on an agreement, I do not need to consider further AUC’s arguments that it had taken steps in part performance, making the agreement enforceable. For the sake of completeness, however, I will address the arguments briefly.

[50] AUC contends that it gave notice to a tenant of the 22 Taui Street site at the request of RDC, so that the contractor could have prompt access to the site. RDC denies ever making this request, and says that the timing does not support it (notice was given in early April 2011). He submitted that it was born out of AUC’s optimism, rather than a realistic view of the state of negotiations. He argued that at best it was ancillary to any agreement rather than an act undertaken in performance of an obligation under the agreement.

[51] AUC also says that it entered into a long term agreement with telecommunications company 2Degrees Mobile Ltd for the siting of a telecommunications tower, in reliance on a concluded agreement with RDC (saying that it would not have agreed to put it in the middle of a street frontage if it were not for the fact that RDC had committed it to lease of surrounding land). RDC’s response is that although it accepts that this lease was in reliance on entering into an agreement with it, AUC was again overly optimistic about the existence of that agreement, but in any event it could not be said that this was an act in performance of its obligations under the agreement. Again, at best it was an ancillary matter.

[52] I consider that there is considerable merit to RDC’s arguments, but for the

purposes of the present application I will confine myself to saying that there are

disputes as to whether RDC required AUC to give notice to the tenant, and as to whether RDC knew of the possibility of a lease of the land for the telecommunications tower, and both of those matters would be relevant to whether the Court should grant relief on the basis of part performance. These are not matters that could be decided on the present application. They are probably matters for cross-examination at trial.

Decision

[53] For the reasons I have given the plaintiff has not satisfied me that RDC does not have an arguable defence. The application for summary judgment is declined.

[54] Costs are reserved pending final determination of the case.

[55] RDC is to file and serve its statement of defence by 18 July 2012. The Registrar is to allocate a case management conference at an available time and date in the week commencing 16 August 2012. That timing has been set to allow counsel time to confer and reach agreement on discovery matters in accordance with the High Court Rules introduced at the commencement of this year. Memoranda for the conference are to be filed and served by AUC three working days in advance, and by

_{RDC two working days in advance.}

Associate Judge Abbott